Section 10 - Composition levy.

THE CENTRAL GOODS AND SERVICES TAX ACT, 2017

As per the provisions of Section 10(1) a registered person, whose aggregate turnover in the preceding financial year did not exceed Seventy five lakh rupees or fifty lakh rupees as the case may be, may opt to pay tax at composite rate as specified.

Therefore, to determine the eligibility for composition scheme, turnover the previous year is to be ascertained and considered.

For example, if during the Year his turnover was below the threshold limit, he can avail the benefit of scheme during the current year.

But, if during the previous year this turnover was above the the threshold limit, he cannot avail the composition scheme during the current year.

Now if during the current year his turnover remains below the threshold limit, he can avail the benefit of composition during the next year. However, in such a situation he will be required to submit a fresh declaration for availing the scheme.

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Aggregate turnover shall be computed on the basis of turnover on all India basis. It includes aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number but excludes GST and cess.

Composition scheme eligibility: turnover in preceding financial year determines entitlement; aggregate turnover is all-India and fresh declaration required. Eligibility for the composition scheme depends on aggregate turnover in the preceding financial year not exceeding the prescribed threshold; aggregate turnover is computed on an all India basis and includes taxable supplies (excluding inward reverse charge supplies), exempt supplies, exports and inter State supplies by the same PAN, while excluding GST and cess. Eligibility is reassessed each year; a fresh declaration is required to opt into the scheme after becoming eligible.